A costly hack of Target’s computer systems in the holiday season late last year resulted in the compromise of customers’ credit and debit card information and immense damage amounting to $148m for the retailer.
The security breach saw the exit of the Company’s CIO and CEO, and the loss will be included as expenses in the second quarter results of 2014. A $38m insurance coverage is still not enough to alleviate its misery.
Coupled with discount sales at its U.S. stores and cautious customer spending in Canada, this has lowered Target’s outlook for this year’s second quarter roundup.
Expected share earnings for Target have come down to 78 cents from the earlier 85 cents to $1. Results for early debt retirement losses and a reduction of undeveloped land value are also included in items to be affected.
Target’s CFO and interim chief executive, John Mulligan said: "While the environment in both the U.S. and Canada continues to be challenging, and results aren’t yet where they need to be, we are making progress in our efforts to drive U.S. traffic and sales, improve our Canadian operations and advance Target’s digital transformation."
Target appointed Brian Cornell, PepsiCo executive, in place of CEO Gregg Steinhafel last week, to smooth things over.
Cornell takes over later in the month and is the first outsider to be considered for Target’s top job. He has also worked at Wal-Mart Stores, a rival of Target.
His work is cut out as Target’s corporate reputation needs to be restored and he will have his hands full devising strategies to turn around traffic from online shopping to the big-box stores.
Target’s quarterly results are scheduled for August 20.
